Two months ago, Disney Games announced a massive $1.5 billion investment in Epic Games to support the creation of a persistent universe within Fortnite featuring the company’s major intellectual properties.
Yesterday, VentureBeat reported that Disney Games is hiring new industry executives to prepare for a new wave of investments. Bjorn Tornqvist has recently joined as the new vice president of games technology after a couple of decades at Ubisoft Massive (he was most recently the technical director for Avatar: Frontiers of Pandora), while Ray Gresko, formerly chief development officer at Blizzard Entertainment, is joining the team as senior vice president of product and development.
Disney exited in-house game development several years ago, opting to license its prized franchises to third-party developers and publishers. However, due to the continuous rise in game budgets (Marvel’s Spider-Man 2 reportedly cost Sony $300 million, a third of which was spent just on the license), major publishers are slowly moving away from licensed IPs. Electronic Arts famously announced the news to investors in late February while canceling a Star Wars first-person shooter game in development at Respawn.
Given this major ongoing shift in the games industry, could Disney be interested in building its own studios again or perhaps acquiring existing ones? We asked MIDiA Research Games Industry Analyst Rhys Elliott for his opinion.
It is unlikely that Disney would create a studio from scratch. There’s too much risk involved. In some cases, established AAA studios take five years or more to make a game from the ground up, and these studios are versed in operating games. For example, Xbox created the AAA studio The Initiative in 2018 to work on Perfect Dark, and six years later, we haven’t seen anything tangible from that team. Disney does not want these costs on the books.
The likelier outcome is that Disney would invest in a games studio – not outright acquire them – to get some skin in the game. This was the impetus behind Disney’s decision to invest in Epic Games to create experiences within Fortnite (similar to LEGO Fortnite). Disney will continue to rely on third parties and invest in studios while also leveraging UGC platform games (sometimes called metaverses).
You’re right that AAA publishers are pulling away from licensed IP. However, that is on a micro level. Looking at the macro level, there are a lot of Disney IP-game irons in the fire. Last year marked the end of EA’s exclusivity over Star Wars games. As a result, right now there are Star Wars games in development by EA (the third game in the Jedi trilogy and a strategy game co-developed by Respawn and Bit Reactor), Quantic Dream (Star Wars Eclipse), Ubisoft (Star Wars Outlaws), and others. On the Marvel front, we have Marvel 1943: Rise of Hydra from Skydance Media, Wolverine and Venom titles from PlayStation, and Blade and Indiana Jones from Xbox. Both the licensor (Disney) and the licensee (the games publishers) will analyse the results of these releases before the next steps in their strategies begin in earnest. If these games do well for EA, Xbox, Ubisoft, and others, they will continue investing in Disney-owned IP games.
What’s more, user acquisition in mobile games is a HUGE issue right now due to privacy changes brought about by Apple. One of mobile’s biggest success stories since those changes has been Scopely’s MONOPOLY GO!, based on a very recognizable IP. IP-based games have – in some cases – been an oasis for mobile publishers during these trying times. This will continue to be the case, as IP-based games already have built-in hype and audiences. The games just need to be executed correctly and fit the IP.
Outside of mobile, IP-based games by established studios are incredibly powerful when done correctly, as shown by the likes of Hogwarts Legacy and Marvel’s Spider-Man. They aren’t going anywhere. And the influx of UGC platforms like Roblox, Fortnite, and others are giving companies like Disney another, less risky, and cheaper avenue to inject their IP into games.
Indeed, due to the nature of game development, there are still many upcoming licensed projects based on Disney IPs. However, unless the industry finds a way to slow the skyrocketing budgets, the most successful third-party developers and publishers will increasingly focus on their owned franchises going forward.
